PC Industry Takes Another Dive As Vendor Losses Mount

New research has revealed a worrying trend for the PC industry with several observers claiming that there is every possibility that the traditional Australian PC industry will not recover as consumers choose smartphones and tablets over notebooks and desktop PC's.

Last week Hewlett Packard Australia was exposed by the Australian Competition & Consumer Commission for trying to cut costs by denying consumers their warranty rights, we also revealed that their Australian subsidiary had reported losses in excess of $58M for 2012.

Recently Acer Australia reported $5M in losses and a 38% decline in sales with several retailers reporting a significant slump in demand for traditional PC products.

Dell who has seen a significant decline in PC sales has moved to move their Company out of the spotlight by trying to take the Company private.

Overnight Gartner revealed that global PC sales have fallen for the fifth quarter in a row, making it the "longest duration of decline" in history. They said that unit shipments had declined 10.6% to 76 million units with several PC vendors now trying to prop up sales by targeting developing Countries with low cost tablets.

Separate data released by IDC revealed an 11.4% decline in global PC shipments during the period, from a year earlier.

IDC, which uses a slightly different method to calculate the data, said that shipments totalled 75.6 million units in the second quarter.

H-P and Lenovo's neck-and-neck competition continued. This time Lenovo is back in the top position - but only by a small difference in market share.

But while H-P was slightly behind globally H-P remains market leader in key regions luding the US EMEA and Latin America. Asia/Pacific has been a weakness the last three years for H-P but preliminary Q2 results suggest an improvement of its performance in the region.

Dell's shipments were - compared to a yearo but the latest results showed a smaller decline than the past several quarters. Dell showed good growth in the US and Japan but struggled to rease shipments in Asia/Pacific and EMEA.

Both Acer and Asus showed steep declines compared to Q2 last year partly affected by their strategies to exit the mini-notebook market.

"While Windows 8 has been blamed by some as the reason for the PC market's decline we believe this is unfounded as it does not explain the sustained decline in PC shipments" Kitagawa said.

In Asia/Pacific PC shipments surpassed 26.8 million units an 11.5 percent decline from the first quarter. All country markets across the region showed weakness but India performed slightly better due to a state PC tender fulfilment.

Also feeling the effect of the decline in PC sales are accessory manufacturers with Companies like Logitech, Microsoft and Belkin sales hit by the fall in demand for accessories that attach to a PC.

Gartner said the introduction of low-cost tablets had further hurt PC sales, especially in emerging economies.

"In emerging markets, inexpensive tablets have become the first computing device for many people, who at best are deferring the purchase of a PC," said Mikako Kitagawa, principal analyst at Gartner, said in a statement.

"With second quarter growth so close to forecast, we are still looking for some improvement in growth during the second half of the year," said Jay Chou, a senior analyst at IDC Worldwide PC Tracker.

But he warned that the sector was facing risks and much work needed to be done to turn around things.

"Slower growth in some markets reflect the risks, while the improved US outlook reflects potential improvement. Still, the weakness in emerging markets is a threat to a core long-term growth area," Mr Chou said.

"In addition, while efforts by the PC ecosystem to bring down price points and embrace touch computing should make PCs more attractive, a lot still needs to be done in launching attractive products and addressing competition from devices like tablets."